Page 24: of Offshore Engineer Magazine (Jul/Aug 2024)

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MARKETS OSVs sion to increase the windfall tax on oil and gas (O&G) recovered from the doldrums of past years and, as seen producers does little to change this development. Late in the graph above, dayrates for term work is currently in July, the new Labour government announced that it at levels last seen in 2014 measured in USD. Yet this will (yet again) increase the Energy Profts Levy by 3%, is without adjusting for infation, and while we report which brings the headline rate of tax up to 78%. More- higher utilization rates as of late these fgures admit- over, in an effort to shift investments into cleaner ener- tedly concerns a smaller number of vessels than prior to gies, it will also terminate the 29% tax offset allowance the downturn. on capital re-invested. Even more so, it is also important to consider just how

Perhaps this column is not the best place to discuss persistently fragile the market balance in the North Sea the effects of carrots versus sticks, but we would argue region is. The UK and Norway now have roughly the that the only certain effect of these recent changes is same amount of AHTS and PSVs. The total demand for that volume of investments will see another turn for the supply vessels on the Norwegian side has developed rela- worse herein. And while there is something to be said tively fat and is not likely to accelerate within the near for the politics of energy security, the impact on off- future. With an absence of activity in the UK side, the shore activity, and as such, vessel demand, is thus likely historically busy summer season we just went through to further decline. was a let-down for a lot of the shipowners in the region.

The level of O&G investments in the other major off- In the spot market, average dayrates for PSVs in July shore country in the North Sea region, Norway, has seen were just GBP 12,500 for large vessels with fxtures re- something of a renaissance in the last couple of years. The ported as low as GBP 5,000 – this in one of the most tax scheme incentive package that was initially offered important months of the year. AHTSs fared quite a bit in order to counter the negative impact Covid-19 had better, averaging around GBP 56,000 per day, yet herein on the country’s O&G industry saw 13 new greenfeld the utilization during the month as a whole could cer- development in addition to a several brownfeld plans tainly improve.

representing around NOK 300 billion in investment an- Meanwhile demand for OSVs continues to rise frm- nounced through 2022. ly almost across the board with calls for international

Moreover, the country’s production development has tonnage to participate more often than not. As for the also maintained a far greater momentum than that of its rationale behind mobilizing further vessel out of the neighbour. At the start of 2024, Norway’s O&G pro- North Sea it becomes abundantly clear when compar- duction was a little north of 4 million boepd, which is ing term dayrates across key offshore regions. The graph just around 12% lower than its peak production back below, which shows regional distribution of term day- in 2004. And although a large portion of the new feld rates in USD at the end of the second quarter, tells us development are subsea focused, tie-backs or other types that the North Sea is lagging behind other comparable of developments based on existing infrastructure, it still regions, so why would you not seize opportunities that maintains a signifcant level of vessel demand. arise elsewhere?

It should be mentioned, however, that the O&G in- In conclusion, we remain positive about improving dustry as a whole has taken huge effciency strides dur- market conditions in the OSV industry as a whole and in ing the last decade, both in operations as well as techno- the North Sea region overall. Yet we need to maintain a logical aspects. More effcient drilling operations and an certain degree of realism to what has been the main driver increased market share of the production infrastructure behind positive development and what we can reason- going on the seabed foor compared to topside means less ably expect going forward. We fnd it diffcult to see local vessel demand for PSVs and AHTS compared to more market demand impact dayrates herein, but rather expect conventional developments. continued vessel demand globally to likely see more ves-

Overall, the market in the North Sea certainly has sels mobilize out of the North Sea. 24 OFFSHORE ENGINEER OEDIGITAL.COM